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Research indicates mortgage application failings
21 April 2007
MoneyExpert.com has reported 463,000 mortgage applicants have been turned down by lenders in the six months to mid-March 2007.
The research showed applicants aged between 18 and 34 were worst affected and indiacted that the impact of rising interest rates was a major factor in the number.
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MoneyExpert.com said that three Base Rate rises since August 2006 would add around £750 to the annual cost of an average £100,000 variable rate mortgage.
Sean Gardner, chief executive of MoneyExpert.com, said: “Affordability is the major issue in the mortgage market as recent reports of a drop in the number of first-time buyers demonstrates.
“The fact that around 77,000 mortgage applications are rejected a month means it is likely that it is not only first-timers who are being hit. Lenders quite reasonably do not want to take risks when there are pressures on how much people can afford.
“Anyone taking their first step on to the property ladder needs to take advice and research the market before making an application.”
Colin Snowdon, chief executive of Freedom Lending, commented: “While I wouldn’t rule it out, I would be surprised if rising interest rates are a major contributing factor. For those lenders using income multiples, interest rates do not matter, and for those with affordability calculators, I don’t believe many lenders directly link decisions to interest rates. The rising level of consumer debt may well be a factor, as that is linked to interest rates.”